Cracker Barrel Old Country Store Inc (CBRL, Financial) has experienced a daily loss of -3.52% and a 3-month loss of -26.86%. Despite these losses and an Earnings Per Share (EPS) of 4.24, the stock is significantly undervalued. This article provides a detailed analysis of Cracker Barrel Old Country Store's valuation, encouraging readers to delve into the financial intricacies of this company.
Introduction to Cracker Barrel Old Country Store
Cracker Barrel Old Country Store Inc operates hundreds of full-service restaurants throughout the United States, offering home-style country food for breakfast, lunch, and dinner. With all restaurants located in freestanding buildings, Cracker Barrel also includes gift shops contributing roughly a quarter of the total company revenue. The current stock price stands at $69.4, significantly lower than the estimated fair value of $153.57, indicating that the stock is undervalued.
Understanding the GF Value
The GF Value is a proprietary measure that calculates the intrinsic value of a stock based on historical multiples, an internal adjustment factor, and future business performance estimates. The GF Value Line on the summary page provides an overview of the fair value at which the stock should be traded. If the stock price is significantly above the GF Value Line, it is overvalued, indicating poor future returns. Conversely, if it is significantly below the GF Value Line, it is undervalued, suggesting higher future returns.
Cracker Barrel Old Country Store (CBRL, Financial) is currently undervalued, with a market cap of $1.50 billion. The stock's future return is likely to be much higher than its business growth due to its significant undervaluation.
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Evaluating Financial Strength
Investing in companies with poor financial strength carries a higher risk of permanent loss of capital. Therefore, it's crucial to review a company's financial strength before deciding to buy its stock. Cracker Barrel Old Country Store's cash-to-debt ratio stands at 0.02, which is worse than 95.16% of 351 companies in the Restaurants industry. The overall financial strength of Cracker Barrel Old Country Store is ranked at 5 out of 10, indicating fair financial strength.
Profitability and Growth
Investing in profitable companies is less risky, especially those with consistent profitability over the long term. Cracker Barrel Old Country Store has been profitable 9 over the past 10 years, with a revenue of $3.40 billion and Earnings Per Share (EPS) of $4.24 over the past twelve months. Its operating margin is 3.67%, ranking better than 51.43% of 350 companies in the Restaurants industry. Overall, the profitability of Cracker Barrel Old Country Store is ranked 7 out of 10, indicating fair profitability.
Growth is one of the most critical factors in the valuation of a company. Cracker Barrel Old Country Store's average annual revenue growth is 3.3%, ranking better than 66.27% of 332 companies in the Restaurants industry. However, the 3-year average EBITDA growth is -10.6%, ranking worse than 74.55% of 279 companies in the Restaurants industry.
ROIC vs WACC
Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. Cracker Barrel Old Country Store's ROIC is 5.46, and its cost of capital is 7.12, indicating that the company is creating value for shareholders.
Conclusion
In conclusion, the stock of Cracker Barrel Old Country Store (CBRL, Financial) is significantly undervalued. The company's financial condition and profitability are fair, although its growth ranks worse than 74.55% of 279 companies in the Restaurants industry. For more information about Cracker Barrel Old Country Store's stock, check out its 30-Year Financials here.
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